6/04/2010 @ 5:00PM

BP Won't Sink Hayward, But Dividend Could Spring A Leak

BP
was firm in its support for embattled Chief Executive
Tony
Hayward
Tony Hayward
in a call with investors Friday. Unfortunately for investors it didn’t offer the same staunch support for its robust dividend.

“The message [on the dividend] was mixed — not the strong affirmation the market was hoping for,” says Raymond James analyst Pavel Molchanov. “Reading between the lines: pressure from Washington for a cut or suspension will be taken into account.”

From a strictly financial standpoint, Molchanov believes the current dividend can me maintained, but with politics entering the picture, the calculation becomes a tougher one. He notes that the dividend is of particular importance in the UK, where approximately 12% of all FTSE 100 dividends come from
BP
.

Meanwhile, recent comments by Hayward, including the acknowledgment that the oil giant was not equipped with the proper tools to handle the disaster surrounding the massive oil spill in the Gulf of Mexico, have resulted in some bad press and increased the public’s ire toward the company, leading BP to host a conference call with worried investors Friday.

But according to people who listened to the call, the company seems to have little appetite for changing horses in midstream.

“The chairman expressed full support for [Hayward], and there isn’t anything more supportive they could have said at this time,” says Jason Gammel of Macquarie Research, adding that one would presume such support for Hayward extends to the rest of his team.

Despite the pressure on Hayward, Wall Street is backing BP’s chief, as well. “He has made comments that are not very helpful, but frankly that’s not what investors care about,” Molchanov says, “and if it’s a choice between a strong response with some public relations gaffes [and a weak response], I think 99% of people would take the strong response.”

Meanwhile, BP managed to place a cap atop the blown-out Gulf well Friday. Unfortunately, the massive amount of oil continuing to spew out of the pipe obscured it from view, making it impossible to tell whether the company’s latest attempt is having any success. The attempt follows the failure of the “top-kill” procedure over the last weekend. (See “BP’s Spill Continues To Drown Stock.”)

Ironically Hayward came into his job three years ago promising to focus on safety after a series of accidents, including the 2005 Texas City, Tex. refinery explosion that killed 15 people. Previously he was head of the company’s exploration and production division.

On Friday shares of BP fell 5.4%, or $2.11, to close at $37.16. Since Apr. 20 BP has seen its share price fall 38.6%, representing a $73 billion loss in market capitalization.
Transocean
, which owned the destroyed rig, lost 1.8%, or 91 cents, to $50.20, on Friday, though its stock has fallen 45.5% since Apr. 20, representing a $13.4 billion loss in market share.

Halliburton
, which was also involved in the destroyed rig, fell 2.2%.